What to Know When Buying Real Estate for the First Time

If you’re looking at buying a property for a residence or investment and have never been through the process before, congratulations! Buying real estate is extremely exciting, but can also throw a few surprises your way if you’re a novice. Here, we’ll discuss some ways to minimize your risks and surprises and still profit from your real estate investment.

First, you need to determine what market you’re looking at. Perform an online search for available properties in your desired area to get an idea of housing prices there, and how much house you might be able to afford. You can also call a trusted real estate agent or broker to help you narrow down the field a little more.

You don’t need to know all of the lingo and details of the fine print, but at least get familiar with the terms and workings of escrow accounts, titles, insurance, contracts and agreements, and closing procedures so you’re not totally lost in the process.

Now, you need to find acceptable pre-approval from a mortgage lender. You may qualify for a special FHA home loan as a first-time buyer, so inquire about this option; this will also allow for a lower interest rate and lower down payment.

After finding some interesting properties on the Internet, take a nice leisurely drive to the area and look at the neighborhood and property in real life. Also randomly drive around or take a stroll for ‘For Sale By Owner’ signs if you determine the area is ideal for you. Notice how many homes in the area seem to be vacant and for rent – this may indicate if the neighborhood is headed downhill, which will only lead to lower property values in the future. That’s not a good investment!

Even if the neighborhood is great, you may find that your direct neighbors have allowed their properties to slack. Remember that if this does not change, it will still directly affect your home’s value in the future.

Now, go home and search for comparable sales in the area over the past few years. Are prices falling or rising? If they’re on the way down, you might want to hold off for a minute to ensure they don’t plummet after you buy. This will also tell you if the asking price is reasonable or too high, leaving you with plenty of room to bargain.

Once you narrow the field down to a handful of choices, call a local agent if you haven’t already. Tell them you want to schedule a showing to see these properties, and ask of similar ones they may know of but you haven’t found. Sometimes, agents have access to exclusive listings that are pretty difficult for individuals to access on their own.

When touring the property, take notes of every single little thing you see that you either don’t like or will need to be repaired. These items are also of great negotiating value when it’s time to make an offer – this saves you money and allows for a better investment in your future!

Using the Internet to Buy and Sell Real Estate

In recent years, the vastness of the growing Internet businesses has come to affect every type of real estate dealing that any investor can take advantage of. Using this technology to access dedicated sites can significantly reduce costs and energy put toward buying and selling any property.

In the past, investors were forced to read through local and out-of-town publications to find an ideal property. Real estate agents were required to aid in this search and narrow the field to a few choices fitting the needed features and requirements. Now, it’s easier than ever to perform a simple search and view information and statistics about properties in virtually any part of the world.

Several photos and video tours can also be viewed, serving as a great tool for far-away properties that may serve as a vacation or seasonal home. Data including taxes paid and estimated future payments, title and lien information, legal and zoning information, as well as any type of relevant structural or repair issues can be found with the click of a mouse. This is also an ideal tool for moving out of state to an unknown area, preventing the need to take time out of your busy schedule to travel to and tour the town.

New possibilities in the realm of real estate loans are also catered to on various sites; you can apply for and download a pre-approval form before ever leaving the house to view a property in person. There are several lower-cost home loans available through local and national lenders, as well as those with only a virtual presence and significantly lower overhead.

Properties available around the world allow for investing in European or Australian properties, and provide a great rental income when you aren’t visiting the area yourself. Conversely, foreign citizens are also able to invest in American properties, allowing everyone a piece of the real estate pie.

Selling has also become less expensive and easier through use of the Internet. For Sale By Owner sites are frequently visited by potential buyers, as they are tight on time, too! Buyers have no more time than sellers do to physically visit every potential property, and these dedicated sites present a great way to peruse and narrow the field based on specific search criteria.

No longer is it required to fork over a huge sum of money to pay real estate agents’ commissions; typical percentages can reach as high as 6%, or $6,000 on a $100,000 sale. This is not cheap! Advocates of For Sale By Owner properties know that this expense is immediately foregone.

The Internet allows for creative marketing and selling strategies with individual attention that only you can provide. Although real estate agents provide a valuable service, sufficient marketing is still easily achieved through free and low-cost online listings.

It’s expected that this entire industry will become advanced enough to allow for even electronic sales to take place over the Internet, preventing the need for first-hand meetings and negotiations. Buyers and sellers can communicate electronically, but it is suggested that all seriously considered properties be visited in person before signing the dotted line.

Things You Should Know Before Investing In Foreclosures

If you’ve never invested in a foreclosure home before, the advertised listings may at first seem irresistibly inexpensive. However, there are several investigative actions you need to take to make sure you don’t get into trouble and have a disaster on your hands.

When any type of home or land mortgage loan is defaulted on by an owner, the mortgage finance company will eventually take ownership of the property in question. State laws differ, but most will require the finance company give the owner plenty of time to come current on their home mortgage loan. If they don’t do this, the bank then takes possession of the property.

This complicated legal process is very tricky, and full of money pits if you try to intervene at the wrong time. Some investors will look for pre-foreclosures occupied by troubled homeowners having trouble paying their home mortgage loan payment. However, it is usually best to wait until the bank has full ownership and you can deal directly with them.

Some foreclosures allow the homeowner the ‘right of redemption,’ where the owner is given a certain amount of time to pay back the debt and reclaim their home. This is usually the case with sheriff’s sales, where homes are auctioned that owe property taxes.

As a general rule, you should adopt the practice of never pursuing a property that is not at least at the Notice of Default stage. This will give you a property to keep an eye on and wait for the impending eviction and change of hands.

Some investors try to bid on a foreclosed property without ever seeing it. This is not a good idea! Modern cameras and creative angles can produce a pleasant picture of even the most distressed property. Contact the bank or real estate professional listed with the property, and ask to schedule a formal showing. If this is not possible, visit the property in person and examine the foundation and exterior, and peek through the windows for a better idea of what’s going on inside.

This is very important because most foreclosures are sold ‘as-is.’ This means there are no points of negotiation or any repairs the seller will finance; however, major repairs may permit a much lower bid.

A professional inspection should still be completed once the agreement is reached with the owning institution of the property. This is not because the property should be flawless and need no repairs, but that you need to be aware of any problems you didn’t know of before making an offer. Your purchase agreement will be signed with the contingency of a satisfactory inspection to prevent you from buying a sinkhole.

You’ll also want to have a complete and thorough title search performed on the property. This will alert you if there are outstanding tax liens, mechanic liens or other mortgages on the property; you’ll want to know this as the new owner, because buying the property means you’re now responsible for them!

The Art of Negotiating in Real Estate

Investing in real estate requires negotiation skills that most people don’t inherently possess. This stage of a sale or purchase is perhaps the most difficult, especially if financing is already in place. As an investor, you should expect immediately to never receive absolutely everything you want in a deal at the price you want to pay.

The basic requirement to negotiate any situation is an arsenal of information. In real estate, this requires knowledge of property law, the local housing market, and the current status of the seller.

Is the seller currently in foreclosure proceedings and eager to rid themselves of the property to avoid legal action? Are they recently divorced and need to sell quickly? Do they seem eager to finish the deal when you have contact with them?

Other important information you should arm yourself with is how long the house has been listed on the market, whether payments are current, if the seller is over their head in debt balances, and what other, if any, offers have been made on the property.

This information obviously can’t be asked outright, but you can gradually pull information from the seller in bits and pieces over several conversations. Simply ask why the home has been on the market so long – do they offer any information? If they tell you that all offers they’ve received have been too low, you can bet they are being unreasonable and won’t negotiate the price very much.

Take note of the condition of surrounding properties in the same area, and determine where the property in question really stands. Research recent sales in the last two years to see if the asking price is ridiculous or fair for the state of the property. Is there a trend of foreclosed or otherwise empty homes in the neighborhood? Are prices falling quickly? If so, this may be a clue that the area is on its way downhill, and this is never a good investment!

In order to be successful during negotiations, make sure your side of the table is in order. Secure all home mortgage financing loans with a pre-approval letter from your bank. Money always talks, and this is a great tool when bargaining chips start flying!

When offering a price, take all of your information and offer a fair price for the property. Allow yourself some room to negotiate closing and other costs as well. These may include agent commissions, bank origination fees or ‘points’, title insurance and search, and inspections. You may also want to make an initial offer and wait for a reaction from the seller to determine if you may be too low; perhaps you can then offer a higher price in exchange for a new roof or other repair that’s needed.

Choose a purchase price for the agreement that is not a rounded-off number. Instead, calculate a percentage of the full asking price. For example offering 123,000 and 123,400 on the same property are very different. The seller may wonder if there is special information you are privy to, or quickly agree to it. On your end, it’s only a difference of $400, but to a troubled buyer that’s a great deal of cash!

Should You Use An Agent to Sell Your Home?

Many homeowners choose to try to save money in real estate agent commissions by posting their home ‘For Sale By Owner,’ or FSBO in the real estate world. This commission can reach as high as 6% of the sale price, but you must consider the time and energy that a seasoned professional may be able to put toward selling your home that you may not.

Expansive advertising methods available exclusively to agents provide a wider audience to entice a buyer, and an agent will also handle showings for you. If you are not willing to put the time and energy into doing these things yourself, you should probably retain the services of a good real estate agent.

Don’t forget that you will need to spend money on advertising if you sell your home yourself, too. Newspaper ads and flyers can get quite expensive, especially if the home doesn’t sell immediately – and there’s no way of knowing when this will happen!

If you home sells for $200,000, a 6% commission will amount to $12,000 for the agent. Depending upon the amount of equity you have in your home, this can be very expensive. However, you can always try negotiating payment of the commission with your buyer, either asking them to pay it in full or splitting it with you.

Agents also provide other advantages, such as living and breathing the housing market in your area. They can easily asses a good price to list your home at, and help you to adjust it to account for a shorter selling time. Even a 1 or 2% difference in price can make the difference between your home being on the market for a year versus a month or two.

A trained real estate agent will also know what features of your home will attract the most buyers, and play up these features to entice additional showings. Don’t forget that most prospective buyers team up with one real estate agent that is familiar with their needs and interests, so contacting an agent may immediately find you one or two potential offers.

All this being said, it is still possible to post your home FSBO and be successful. If you are just trying to quickly rid of it, you can post a sign and a few online ads at a low enough price. Utilizing all the tools available on the Internet today can help you reach a wide audience of potential buyers – you can even post your own FSBO website featuring only your property and add a mortgage loan calculator if you’re computer-savvy!

Even if you don’t use a real estate agent or broker, you’ll need to seek out the aid of a real estate attorney or other professional along the line. Purchase agreements and other contracts will need to be drafted, and things such as inspections and title searches will be conducted.

A good place to start may be with your current mortgage lender to ask for a great referral or tools such as generic contracts which may apply to your situation.

Reducing Your Cash Outlay When Buying Real Estate

Real estate is perhaps the most expensive thing most Americans will buy during their lifetime. Unless, of course, they can afford rare collector items as well! However, pursuing a home mortgage loan can be quite intimidating and seem like tons of cash is required to ever get the deal done.

This isn’t always the case, as several banks may offer a bad credit home loan option if the loan to value ratio is in their favor. Also, it’s best to conserve enough cash for emergencies or any improvements and repairs that may be needed in your new home. You’ll have plenty of other expenses outside of a huge down payment to inspect, close and move into the property!

Closing costs do not only entail home loan points, but also include a real estate agent’s commission, title expenses, hazard and liability insurance, and any other items that you want to cover before taking possession of the property. This process is much like buying a car; the sticker price is only the beginning of what you’ll end up paying! Luckily, the seller will usually be the party that gets to pay the agent’s commission for selling their property.

The key to conserving as much cash as possible is to stay well within your budget. How do you know what this number is? Go to your local mortgage broker or home loan finance company and inquire about the best home loan rates available. How do you qualify for these rates? Ensure your credit and current accounts are all in good order, you have sufficient funds for a down payment and an emergency savings fund, and get pre-approved before ever shopping for a new home.

Only bad credit home loan applications should require an application fee; there is time and money spent in reviewing your application, and if it is doubtful you will be approved, the home loan mortgage company may require this upfront.

Real estate agents and lenders will usually suggest a specific title research company while closing the deal, but you may still shop around for a better rate in this area, too. This option will give you more control in both the cost and power of the transaction.

The next step is to start shopping for insurance. Start with any insurance companies you currently do business with and inquire about discounts for adding a new policy with them. You may also find that certain counties or townships have a significantly higher insurance rating that makes the same priced home out of your budget; this is good to know before submitting a formal offer, and there’s no sense in looking at homes you can’t afford!

Finally, after receiving pre-approval from your lender, ask what options are available to you. Can you afford a higher interest rate by paying a lower down payment? How will this affect the life of the loan and your monthly payments?

Seller financing options are also a great way to conserve your own money; often, a very small down payment is required, and you simply assume the payments without ever legally owning the loan.

Real Estate Investment Strategies That Create Profit

In 2004, studies showed that 23% of all homes bought in the market were done so as investment properties. Historical returns on real estate investments can be mind-boggling, even in the midst of a down economy. If you are a novice investor, you should take your time and do your homework. However, here we’ll discuss a few common ways to profit from this type of investment.

Flipping property has become extremely popular in recent years, and virtually every television station features a special show that features these deals. This involves purchasing a property and selling it quickly for a profit. Although you can make a lot of money flipping real estate, the short turnaround time eliminates the possibility of additional tax deductions and appreciation.

When scheduling your budget for a property to be flipped, consider not only improvements and repairs, but these costs compared to tax savings if the property is held for a year or more. Interest charges, property taxes and insurance should also be included with the normal home loan mortgage payment.

There is risk of home values falling, but they will always bounce back with a long enough time period. Flipping also allows for purchasing undervalued or foreclosed properties in down markets, and selling at a discounted rate that still produces large profits. Remember that down markets are buyers’ markets, so real estate will still sell during these times.

Another option to creating real estate income is to rent a property you have invested in. Although this will decrease or eliminate your personal obligations for cost of upkeep and mortgage loans, you’ll need to account for costs in advertising and finding a tenant as well as managing the property.

Buying devalued or foreclosed homes can mean that you buy a house for quite cheap, but most require some if not a lot of major repairs. You’ll need to ensure you can finance these repairs and find a responsible contractor if you won’t be performing them yourself.

Always consider that a homeowner about to be kicked out of his home probably won’t take very good care of it. You can make a lot of money buying and selling foreclosures, but you have to be ready and willing to put a ton of time and effort into it.

Abandoned and tax sale homes create similar opportunities, but there are several legal angles you’ll need to be aware of before jumping in on one. Some states won’t even allow you to occupy the property after purchasing at auction; you’ll need to allow the former owner time to repay your investment with interest, sometimes up to a year or more.

Always remember that you can still invest in real estate and avoid mortgage bankers, financing, insurance and real estate agents, outlay in cash for repairs and sweat equity by investing in paper real estate. REITs, or mortgage-backed securities are formed in a variety of ways, and provide an option to own part of the real estate without needing to lift a finger. Always consult an investment professional to find the correct options to fit your needs and lower risk.

How to Save Money on Groceries

If you and your family have been looking for ways to save money lately, you’ve probably been tracking your expenses for some time and notice that your monthly grocery bills are one of your largest. We all want our families to be healthy and have plenty to eat, but this doesn’t need to require a royal budget to be accomplished. Here, we’ll discuss how to save money on groceries and lower your family’s food costs.

First, take a look at where you’re shopping. Are you frequenting a known discount store and purchasing generic items, or are you continuing to shop at the higher-priced grocery stores? Shopping at well-known discount stores can save you up to 20% on your bills immediately.

Next, examine what you actually buy at the grocery. Do you purchase unnecessary snacks, soda and other sugary foods? Is your grocery bill always including alcoholic purchases? If so, you can immediately cut these out and start saving money on your groceries.

Always remember that moderation is best; limit yourself to only half of the amount of unnecessary purchases, and you’ll notice the savings start to add up. You can also start researching the Internet to find creative ways to satisfy these cravings without having to buy a bag of fat-laden potato chips.

Examine how many times you eat out each week or month, including delivery pizza, and total this amount. Typically, if you reduced this amount by half you could save thousands over the course of a year. Start buying bread, meat and cheese for your lunch at work everyday, and treat yourselves to a dinner out once a week instead.

When grocery shopping, make sure you’re not hungry; it’s hard to save money when you want to eat everything you see! Also, make a list and stick to it; plan your weekly meals, and this will lead to less wasteful spending with every trip.

Consider scouring the Internet for low-cost recipes that you can make in bulk. For example, you can easily make an entire stock pot of chili for under $10 that will last a family of four for 4 to 5 meals. This not only reduces your time in the kitchen and lowers your stress, but allows for easily accessible meals available for the kids’ after school snack.

When you’re trying to save money on groceries, you need to examine the prices and value contained in every item you buy. Select produce is always on sale, as well as meat, cheese and other dairy essentials. Compare and contrast prices and volume, and try the generic brands when only regular-priced items are available.

Don’t forget that you can always start clipping coupons, too. This habit doesn’t have to be as time-consuming as you probably think. There’s no reason to spend the time cutting coupons for items you never buy normally, so just give the weekly booklets a quick flip and pick out one or two you may use this week to save money on your groceries.

How to Buy Your Dream Home for Less

Perhaps the most positive aspect of the recent downturn in the national economy is the accompanying decline in the housing market. This means that if you’re one of the lucky ones that still has a job, maintained a good credit score and have saved a sufficient down payment, now may be the best time to buy that home you’ve been dreaming of.

In a declining housing market, foreclosures and REO listings make it quite easy to save money and buy a home at a discount. However, you’ll need to be prepared to spend more time researching and doing your homework.

Even if you aren’t looking at foreclosures or distressed properties, you can expect to save money on even the nicest homes at 15 to 20 percent below former market value. This means that not only do you save money on your down payment, closing costs and future mortgage payments, you’ll have instant equity and enjoy watching the value of it grow after the housing market rebounds in the near future.

When looking at homes, try to pick a few out that are definite possibilities, and then wait. If you want to save the most money possible, homes that are on the market 6 months or more will be more likely to sell at a much lower price.

There’s no point in not asking, even if you can afford the full listing price. Any offer that is immediately accepted means that it was too high, and you probably could have purchased it with fewer of your hard-earned dollars.

You may also choose to search the Internet for homes that have been on the market for several weeks and months before choosing the ones to schedule showings at. These homes are usually priced too high; you’ll notice that many will continue to drop 10, 20, even 30 percent more after so much time has passed.

Remember that due to the current housing market environment, you may find yourself placing an offer on a home that is located in a currently distressed area. Most of these are due to an increasing number of foreclosures and empty homes in the area. Over time, however, these will be sold to new owners and the past state of the neighborhood should recur in a few years’ time.

This is a great way to save money on any repairs needed on the home as well; take your time and perform the work you can on your own, or by recruiting friends and family.

When you tour the homes you’re interested in, take note of every small cosmetic defect or repair that needs to be performed. These are viable negotiation points when finalizing your agreement, and will make a lower offer seem more reasonable when faced with these items.

Try to get the seller to pay for more closing costs to save as much money as possible – it never hurts to ask! Any commissions, inspections, title insurance and other expenses are all negotiable and can help you save big!

Rake In the Cash With A Garage Sale

Everyone love a sale. It is not just the bargain prices of a garage sale, but the little insight into another’s life that many people cannot resist. If money is scant, try cleaning out those jam-packed cupboards and attic and make some money while you spring clean.

Once you have decided on having your sale, pick an appropriate date. Weekends that fall on a holiday are not ideal so try to choose a weekend with fair weather, not too cold and definitely no rain.

Enlist the help of your family and friends, if they can make it. The more, the merrier and the additional help will assist in looking after the items for sell as well as the takings. Perhaps they can add to the stock with some old items of their own.

Display your merchandise in an attractive manner and try to put prices on most items. With a pretty display, you can make your sale items appear more eye-catching and valuable. However, be prepared for some haggling, that is the spirit of a yard sale and you don’t want to appear too fussy or expensive, this will just put potential buyers off.

Reasonably pre-priced items will probably receive less bartering than items with no price in full view. A handy gauge for evaluating your item is to charge roughly a quarter of the original price of the item.

Prior to your sale try to begin your collection well in advance with a few items everyday put aside for the sale. This will reduce the nightmare of getting your stock together on the day, be well prepared and you will be able to enjoy your sale, rather than stressing and getting flustered.

You will be well advised to advertise your sale in advance to give people the opportunity to plan ahead, not too far in advance though, as people might forget about it. Try a local newspaper where an ad can be purchased pretty cheaply, it will be mostly locals interested in attending your sale anyway. Remember to include the address of the sale, no point in advertising your sale and missing out the most vital piece of information.

Look out for other opportunities to advertise such as shop sale boards and bulletin boards, even flyers on light-posts, if allowed. Some areas require a minimal priced permit for your sale, check out the requirements for your town.

Together with your advertisement for your sale, you will need to set up sign posts to mark the spot and entice passers by to browse. Think about the factors included in making your sign to your utmost advantage. The sign must be readable from a distance and not too cluttered. It must be rigid. If there is wind, you don’t want it bending over and defeating the purpose. Make sure there are no laws in your area forbidding garage/yard sale sign-posting.

Place your best items in full view to attract customers and do not place anything nearby that is not for sale. Remember to keep a store of bags for the purchase. It is not a essential but a nice touch.

Once the sale comes to an end, try to get packed up in good time and take down the signs (and any outside of your property).

Garage sales can be an excellent, fun day out for the family and you really can make a tidy sum by cleaning up your house.

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